r egional s trategy 2012 europe and central asia (eca) 1 r egional u pdate supporting our clients to...
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REGIONAL STRATEGY 2012
Europe and Central Asia (ECA)
1R E G I O N A L U P D A T E
Supporting our clients to build the foundations of long-term growth and competitiveness
I. Strategic Framework The three strategic pillars (competitiveness, inclusion, climate action) remain highly relevant
with renewed emphasis on governance
II. Operational ResponseLending expected to be higher than pre-2009 owing to higher demand, complemented by
improved disbursements and a strong Analytical and Advisory Assistance (AAA) program
2R E G I O N A L U P D A T E
2
OUTLINE OF THE PRESENTATION
3R E G I O N A L U P D A T E
3
I. STRATEGIC FRAMEWORK
Create Opportunities
for Growth
Target the Poor and Vulnerable
Strengthen Governance
Promote Global Collective
Action
Manage Risk and Prepare for
Crises
Deepened Reforms for Improved
Competitiveness
Social Sector Reforms for Inclusive Growth
Climate Action for Sustainable Growth
World Bank Group (WBG) Priorities
Addressing ECA Challenges
ECA Strategic Pillars
Drivers of pre-crisis growth (capital flows
and strong export growth) are unlikely to
return quickly
Social inclusion and equity issues will be
tougher to address in a period of fiscal consolidation
Need to improve energy efficiency and reduce
vulnerability to climate change will remain
medium-term priorities
I. STRATEGIC FRAMEWORK ECA REGIONAL STRATEGY IS ALIGNED WITH WORLD BANK GROUP PRIORITIES
4
5
Scale up and Diversify Financial Products
Customize Knowledge
Services
Develop Closer Regional
Partnerships
Sub-Regional Approaches
• ECA Strategy – 3 pillars and 4 instruments – remains highly relevant to support the region in addressing short-term and long-term challenges
• Past engagement has made the Bank better prepared to step up financial and analytical support in response to spillover from eurozone crisis:
• Better starting position owing to renewed and deeper policy engagement in most vulnerable countries
• On-going and planned technical assistance, including crisis monitoring
• Flexibility to top up Development Policy Loans (DPLs) and credit lines
• Closer engagement with EC, IMF and other partners on crisis-response
I. STRATEGIC FRAMEWORK ECA STRATEGY REMAINS HIGHLY RELEVANT
with renewed emphasis on governance
Focus on Competitiveness,
Inclusion and Climate Change
with renewed emphasis on governance
66
Governance
I. STRATEGIC FRAMEWORK - IMPROVED GOVERNANCE IS AN IMPORTANT CROSS-CUTTING THEME SUPPORTING THE THREE PILLARS
•Sound macro-fiscal and public financial management•Good governance for improved business climate and innovation•Stable and well-regulated financial intermediation•Cost-effective investments in energy and transport infrastructure•Education and training systems more accountable for relevant skills
• Increasing employment and reforming labor markets•Ensuring access to quality public services in health and education•Modernizing safety nets through better coverage of the poor and stronger monitoring and control •Closing gender gaps in access to economic opportunities •Helping countries meet remaining MDGs (health MDGs most at risk)
Social Sector Reforms for
Inclusive Growth
Deepened Reforms for Improved
Competitiveness
Climate Action for
Sustainable Growth
• Economically sound adaptation investments• Incentives for energy efficiency• Investments in renewable energy
Bilateral Donors
I. STRATEGIC FRAMEWORKGROWING REGIONAL PARTNERSHIP ESPECIALLY WITH THE EU AND RUSSIA
European Uniono Closer partnership with the EU since the 2009 crisiso EC/EMPLOY– Programmatic Trust Fund for Bank Advisory Services on
EU2020, starting in FY12 with poverty mapping in EU-10o EC/IPA Trust Fund for Research and Innovation in the Western Balkans o Memorandum of Understanding (MoU) signed with EIB and EBRD for
Programmatic Fee-based Services (FBS) in Romania and Bulgaria
International Financial Institutions (IFIs)
o New Vienna Initiative with EC, EBA, EBRD and EIBo Full associate membership of Western Balkans
Investment Framework with EIB and EBRDo Growing Cooperation with CEBo Memorandum of Understanding (MoU) with Eurasian
Development Bank and EurAsEc Anti-Crisis fundo Ongoing cooperation with ADB
Multilateral Donors
Emerging Donor - Russia
o Close partnership with Russia as an emerging donor o Russian Multi-Donor Trust Fund for Public Expenditure Management and Peer-
Assisted Learning (PEMPAL) in ECAo Russian Trust Fund for Policy and Project Capacity Development in ECAo Russian Statistical Capacity Building Fund
Traditional Donors
o Traditional donors are exiting ECA but contribute to Multi-Donor Trust Funds (MDTFs)
o Austria, Netherlands, Sweden, Switzerland, USAID, UK DFID
FY08 FY09 FY10 FY11 FY12 (proj) FY 13 (proj) - 1 7
18 4
43
2
25 21
25 37
49
Russian Federation EC/EU
EU and Russian contributions to ECA Trust Funds by Fiscal Year
$ m
illio
n
7
Central Asia: Management of Energy
and Water
• Development of Central Asia Energy and Water Program; Continued country level dialogue
Vienna Center• Helping to improve
the business environment through improvements in corporate reporting (REPARIS)
• New banking and financial sector initiative
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South Eastern Europe
• Supporting regional dialogue and solutions in Energy, Transport, Water Management, and Disaster Management
• South Eastern Europe Gas Ring
Central and South Eastern Europe
• Analytical work on Roma inclusion; Support for Roma Education Fund and “Decade of Roma Inclusion”; Working closely with the EC, including on monitoring EC funded programs that benefit Roma through FBS
• Danube Region Water and Wastewater program
• Vienna Initiative II building on Vienna Initiative 2009
Caspian to Black Sea Transit Corridor
• Coordinating donor and government road investments
• Regional power trade
I. STRATEGIC FRAMEWORK ..AND A CONSISTENT USE OF SUB-REGIONAL APPROACHES
CIS – Migration and Remittance Peer
Assisted Learning Network
• MIRPAL - Community of Practice on management of labor migration and remittances
9R E G I O N A L U P D A T E
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II. OPERATIONAL RESPONSE
II. OPERATIONAL RESPONSESTRONG DEMAND FOR FINANCIAL SERVICES
New Commitments by Instrument
New IDA/IBRD Commitments
Innovative Use of Instruments
o Policy Based Guarantees in Serbia and Macedonia that leverage lending headroom to support macro stability and fiscal consolidation
o Results Based Lending in Romania for Social Assistance Reform
Projected lending FY12-13 in high case = $15.8 b
$ Bi
llion
$ Bi
llion
FY08 FY09 FY10 FY11 FY12E FY13E0
2
4
6
8
10
12
3.44.5
2.8 3.0 3.34.7
0.8
4.9 8.0
3.14.1
3.7
4.2
9.4
10.8
6.1
7.48.4
DPL IL
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12E FY13E0.0
2.0
4.0
6.0
8.0
10.0
12.0
2.13.0 3.5 3.5 3.3 3.7
9.010.2
5.56.9
7.8
0.60.5
0.5 0.5 0.40.5
0.4
0.6
0.7
0.5
0.6
2.73.5
4.0 4.0 3.74.2
9.4
10.8
6.1
7.48.4
IDA IBRD Series3
10
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II. OPERATIONAL RESPONSELENDING IS FOCUSED ON SUPPORTING COMPETITIVENESS
Lending Shares by Country Management Units (CMUs)
Lending by Strategic Pillar
Innovative Operations o Russia - Financial Education and Financial
Literacyo Latvia - Special DPL on Safety Net and Social
Sector reformo Turkey – Environmental Sustainability DPL
and Renewable Energy and Energy Efficiency loan
o Ukraine - Energy Efficiency Credit Line
2.0
7.3
6.3
9.8
42.3
22.4
10.04.8
17.6
32.36.93.2
28.8
6.4 Russia
Moldova, Belarus, Ukraine
Armenia, Azerbaijan, Georgia
Western Balkans
EU-10 and Croatia
Turkey
Central Asia
FY08 FY11co
mpe
titive
ness
FY09 FY10 FY110
2000
4000
6000
8000
10000
12000
9362.8
10816.2
6124.3
Climate Ac-tion
Social Inclu-sionOther
Skills
Infra-structure
PEM/PFM
Banking/Finance
Business Climate and Innovation
Perc
ent
Perc
ent
AAA Shares by CMU, FY 11
12
Analytical & Advisory Assistance (AAA) Expenditures as a Share of All Funds • Regional Flagships on
• Growth (Golden Growth)• Innovation• Energy Efficiency (Lights Out?)
• Regular economic reports (EU-10, Western Balkans, Russia)• Sub-regional study on Benefits of Roma Inclusion• Poland – “Green” Country Economic
Memorandum (Transition to a Low Carbon Economy) • Russia – PPP – St. Petersburg Airport• Romania – Functional reviews
Selected High Impact AAA
AAA by Knowledge Product
AFR EAP ECA LCR MNA SAR0
5
10
15
20
25
30
18
24 23
17
26
1617
23
29
17
25
19
FY09 FY12
Per
cen
t o
f to
tal
exp
end
itu
res
14
12
8
1216
9
29
Russia
Moldova, Belarus Ukraine
Armenia, Azerbaijan, Georgia
Western Balkans
EU-10 and Croatia
Turkey
Central Asia
II. OPERATIONAL RESPONSE - KNOWLEDGE IS A STRENGTH OF THE REGION, GROWING DEMAND FOR TECHNICAL ASSISTANCE SERVICES
Perc
ent
FY07 FY08 FY09 FY10 FY110
50
100
150
200
250
91 100 98121 133
108 90 76
81 58
ESW TA
Num
bers
III. OPERATIONAL RESPONSE - ECA IS BOTH A CONTRIBUTOR TO AND A USER OF GLOBAL KNOWLEDGE ON DEVELOPMENT
13
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Fragile and poorCountry level: • Support for demand-side governance and
budget transparency (Kyrgyz, Tajikistan)Sector level: • Institutional reforms to improve governance in
agriculture (Tajikistan)• TA to improve transparency and predictability
of social spending (Uzbekistan)Project level:• Governance checklist applied to every project at
mid-term review (Tajikistan)
Russia and other resource rich countries
Sector level:• Advisory work on sovereign wealth fund
management (Kazakhstan) • Diagnostics on regional business climate (Russia) • Procurement reform (Russia)
Ukraine and the South Caucuses
Country level:• Governance a
central theme of Country Assistance Strategies (CAS) (Ukraine)
• AAA – Governance reforms case study (Georgia)
Sector Level:• DPLs which support
fiscal transparency and regulatory reform (Armenia, Georgia)
Project level:• Transport portfolio
fiduciary review (Georgia)
EU and Western BalkansCountry level : • Governance focused AAA to improve
government effectiveness (Romania functional reviews)
Sector Level:• Financial sector stress tests and capacity
building (Latvia) • Technical Assistance (TA) to improve
transparency and predictability of social spending (Latvia, Romania)
• Justice sector AAA (Croatia) Project level :• Civil society monitoring of Bank financed
projects (Albania)
III. OPERATIONAL RESPONSE..AND SUPPORT FOR GOVERNANCE REFORMS HAS BEEN SCALED UP..
Region• Governance and Anti-Corruption (GAC)
outcomes tracked through indicators such as BEEPS, Doing Business, Life in Transition Surveys, etc.
• Governance filters in CGAC countries (Albania, Tajikistan)
Governance Ratings have shown improvement
1999 2001 2003 2005 2007 2009 20102.5
2.7
2.9
3.1
3.3
3.5
3.7
3.9ECA AFREAP LACMENA SAR
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II. OPERATIONAL RESPONSE….ACHIEVING RESULTS ON THE GROUND
MORE COUNTRY RESULTS http://www.worldbank.org/eca/countrysnapshots
EU Members
Policy reforms: • Fiscal: Budget consolidation (Romania)•Financial: Strengthened banking system resilience (Latvia, Romania)•Social: Strengthened social safety nets (Romania, Latvia)
Other results:• Bulgaria: 300km of
roads repaired and functioning; Roads Asset Management System established
Russia and otherresource rich
Policy reforms: • Fiscal: Strengthened oil
fund management (Kazakhstan)
• Financial: Strengthened banking system resilience (Kazakhstan)
Other results:• Russia: PFM reform with
three-year budget framework; more efficient tax administration; treasury single account
• Russia: Improved public service delivery through one-stop-shops, waiting times cut by 65%
• Azerbaijan: Center for Accounting and Audit Training established
IDA/Blend
Policy reforms: • Fiscal: Improved fiscal
management and protection of social expenditures (Armenia, Georgia)
• Social: Strengthened social safety nets (Armenia)
Other results:• Armenia: Improved water
delivery and quality, and customer service: 332,000 households in the capital have running water 21 hours a day, up from 6.
• Moldova: Number of days required to register a new company decreased by 31% from 20 days (2005) to 14 (2010)
Other MICs
Policy reforms:• Fiscal: Budget
consolidation (Serbia, Croatia)
• Financial: Strengthened banking system resilience (Turkey)
• Social: Strengthened safety nets (Albania)
Other results:• Bosnia and
Herzegovina: 37 land registry offices renovated and equipped; over 1.6 million property folios digitized
Fragile (Kyrgyzstan)Policy reforms: • Fiscal: Improved fiscal management and protection of social expenditures•Financial: Strengthened banking system resilience •Social: Strengthened social safety nets
Other results:1,500 villages with access to improved social and economic infrastructure
I. Strategic Framework The three strategic pillars (competitiveness, inclusion, climate action) remain highly relevant
with renewed emphasis on governance
II. Operational ResponseLending expected to be higher than pre-2009 owing to higher demand, complemented by
improved disbursements and a strong Analytical & Advisory Assistance (AAA) program
16R E G I O N A L U P D A T E
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CONCLUSIONS